FirstRand Bank has secured a seven year loan facility totalling $300 million from the African Development Bank (AfDB), which can be drawn in multiple currencies to facilitate the financing of projects across Africa.

The credit facility announced on Thursday sees the AfDB provide a solution to the reliance on foreign currency borrowing in many African countries, which thus far has been seen as a potential trigger of economic instability due to the balance sheet discrepencies caused by wide-spread foreign currency use.

As such, the AfDB has agreed the multi-currency credit facility – to an amount equivalent to the total of $300 million –  in order to try and close the balance sheet gaps in countries forced until now to continue lending activities in foreign currencies.

“With this line of credit, the AfDB is introducing a new and innovative form of local currency financing. This structure can be replicated by other banks in Africa to gain access to funding in African currencies thereby reducing unnecessary currency mismatches and deepening the local capital markets,” Timothy Turner, Director of the AfDB’s Private Sector Department said explaining the facility’s benefit.

Andries du Toit, Treasurer of the FirstRand Group also commented on the value to the banking group of the facility, saying: “This innovative solution will certainly contribute to growth in corporate activity, which in turn supports our own African expansion strategy.”

The credit will be made available in a number of African currencies, including the Ghanaian Cedi, the Kenyan Shilling, the Nigerian Naira, the Mozambique Metical, the Tanzanian Shilling, and the Zambian Kwacha.

The AfDB also envisages some of the funding being used in order to establish bond issuance programmes, thus helping to develop countries’ own capital markets.